Frank Quattrone returns to banking

Frank Quattrone, Silicon Valley’s most powerful investment banker in the 1980s and 1990s, picked a moment of maximum market turmoil to announce that he’s back in business. Yet despite predictions he’d start a private-equity firm, Quattrone instead is returning to his first love, straight-on investment-banking services to high-technology firms. His new outfit, Qatalyst Group, will start as a six-partner boutique in the mold of Greenhill & Co. GHL, Evercore Partners and Moelis & Co., all firms started by former bankers at high-profile firms.

Another prediction that didn’t pan out: Quattrone’s new firm won’t include his former partners, George Boutros and Bill Brady, who together with Quattrone dominated the tech banking world for more than a decade as the team traveled from Morgan Stanley to Deutsche Bank to Credit Suisse, where Boutros and Brady remain. His five founding partners at Qatalyst are a group of 20- and 30-somethings, each of whom worked with Quattrone at Credit Suisse, though none was there immediately before joining Quattrone. The five are Jonathan Turner, 34, a former Internet banker and most recently a biz-dev executive at the online marketing company QuinStreet; Adrian Dollard, 38, the firm’s general counsel; Neil Chalasani, 29, who did a stint at Evercore; Brain Slingerland, 30, who decamped to Goldman Sachs after Credit Suisse; and Brian Cayne, 26, who came from Vista Equity Partners.

For a while, it looked like Quattrone’s name would be linked with the likes of Dennis Kozlowski and Jeffrey Skilling, both of whom are doing time in jail for crimes committed during the market mania that surrounded the dot-com craze. Yet Quattrone’s conviction on obstruction of justice was overturned and he was fully exonerated in 2006. He says he’d been thinking about starting a private-equity firm but decided instead to focus on what he knows best. “I’m more of a growth guy and a strategy guy,” he said, during a Tuesday-morning interview from his firm’s temporary offices in San Francisco.

For all the negative press Quattrone got during his trials, his support base in Silicon Valley remained remarkably strong. It showed in the big hitters he lined up for his firm’s inaugural news announcement. Google goog CEO Eric Schmidt, Intuit INTU Chairman and Valley consigliere Bill Campbell, Facebook investor and venture capitalist Jim Breyer, and Facebook CFO and former Yahoo YHOO treasurer Gideon Yu each lent their names to enthusiastic testimonials.

Quattrone says the new firm has no clients yet as it awaits approval of its broker-dealer registration, a process that could take up to six months. In the meantime, Qatalyst will operate as a division of JMP Securities JMP, much the same way former UBS banker Ken Moelis operated initially as part of Mercanti Securities. Indeed, Moelis is more than a role model for Quattrone. He’s an example the kind of business Qatalyst hopes to win. Moelis currently is advising Yahoo on its defense of a Microsoft MSFT takeover bid, precisely the kind of assignment Quattrone wants to be in the position to take on. Qatalyst also will raise a fund for investing alongside its clients, though Quattrone says that initially the money will come from himself and his partners.

Quattone says that after some “soul searching” he realized that he doesn’t miss the empire-building and “liasing” with New York, Germany and Switzerland that went along with running outposts of major banks during the years he and his team backed iconic companies like Cisco CSCO, Netscape and Amazon.com AMZN. What he misses, he says, is giving “good, old-fashioned, honest advice.”

While Quattrone has been taking time to reflect, of course, his former minions have sprinkled themselves throughout Wall Street. Watching him and his new young recruits compete against them will provide some good, old-fashioned fun in Silicon Valley.

Bye-bye, Netscape

Netscape, we hardly knew ye. This Friday AOL, which, like Fortune Magazine, is part of the Time Warner TWX empire, will become a zombie browser. AOL announced late last year that it will no longer support Netscape, meaning that it won’t update features or provide security upgrades. That means the few people who continue to use the browser should stop. Already, AOL is recommending that Netscape users switch to Firefox.

It’s a peculiar quality of the technology industry that such important companies and products can simply vanish in so short a time. Netscape went public just a dozen years ago and sold to AOL in 1999 for $10 billion. Its battle with Microsoft MSFT spawned an epic antitrust fight with the Justice Department, a topic covered in an interesting Financial Times column today.

Most interestingly, though, is the story of how Netscape itself gave birth to Firefox, today’s browser of choice for non-Apple AAPL users who prefer not to use Microsoft’s Internet Explorer. I use Firefox and cover Silicon Valley, but I didn’t quite know the whole story of how Firefox came to be. It was told quite well today in an article in the San Francisco Chronicle.

VMware: All hail the August tech IPO

VMware (VMW) today joins the pantheon of Silicon Valley companies with the audacity to go public not only in the supposed doldrums of summer but in a rotten market to boot. Past honorees: Dearly departed Netscape from 1995 and Google (GOOG), in 2004.

The Palo Alto software shop, a unit of EMC (EMC) burst onto the public markets this morning by trading at $52 after being priced Monday evening at $29. Things have all gone very much as planned for VMware. As I noted in June, anlaysts expected VMware to go public at about $27. Intel (INTC) and Cisco (CSCO) managed to get in before the IPO, buying sizeable stakes at $23 and $25 per share, respectively.

What’s so great about VMware and August IPOs? Let’s take those questions one at a time.

For all the hoo-hah about new this and new that — read: overhyped Web 2.0 companies you’ll never hear about a year from now — VMware actually solves a problem that matters to big technology buyers. Its virtualization approach allows companies with massive server farms to more efficiently use their server capacity. That simultaneously threatens the big server companies like IBM (IBM), Sun (SUNW) and HP (HPQ) and strengthens the market by making servers more valuable. VMware is the “it” company of Silicon Valley right now, again, among real companies that sell real products. Everyone wants to work with them. The company’s growth has been impressive, far better than that of its parent, whose best move of the past half decade turns out to have been buying VMware. (For the numbers on the growth, see the article I did in the print edition of Fortune; It was called “The next big Silicon Valley IPO.” Sometimes we get it right.)

As for August IPOs, is there some kind of magic? Netscape’s bankers told the company it was folly to go public in the heat of the summer. The company was confident. Google never worried about the month it went public. It fretted more over its auction method. Did VMware plan to do its IPO in August and in the midst of a market meltdown? Certainly not the latter. Still, its success today — and let’s remember, to continue to be a success it needs to keep rising, as Google did, not shrivel like Netscape — is a reminder that 1) there is plenty of capital for quality companies and 2) the markets don’t move in lockstep at all times.

Marc Andreessen: Successful entrepreneur

In his new blog, the famous technologist Marc Andreessen has been sharing with the world what a few of us who’ve known him in his post-Netscape/AOL days have understood for a while now: The guy has got a lot to say about a lot of things. Andreessen is like a rare fish you might see snorkeling or diving. Yes, he swims with the other fishes, but he’s somehow different, more colorful, a standout who isn’t uncomfortable paddling along a bit off to the side.

One of Andreessen’s favorite topics on his blog has been entrepreneurialism and the art of startups. What’s interesting, though, is that it’s only today that the co-founder of Netscape joins the pantheon of truly successful entrepreneurs. Sure, Netscape was a massive financial success. But he was just a kid when it started, and he never was completely in control of its tortured path. Now in his mid-thirties, Andreessen has come into his own. He and his co-founders sold Opsware (OPSW) today to Hewlett-Packard (HPQ) for $1.6 billion, a 38% premium over its closing value on Friday. Andreessen’s stake, according to the company’s most recent proxy, is worth $138 million.

The sale also is a success for a handful of Silicon Valley bold-faced names who aren’t all that well known beyond. People like board members (and noted restaurateurs) Bill Campbell and Mike Homer. And investor Ron Conway. And longtime CEO Ben Horowitz, who, like Homer, worked with Andreessen at Netscape.

The famous co-founder is onto other things, including his new software company Ning, which had an unfortunately timed service outage this morning. But having started a company that had little to do with Netscape, nurtured it through tough times (read his blog entry today for a description), patiently kept at it for eight years or so, and sold successfully to a surging tech behemoth down the road, Andreessen certainly deserves to take a moment and enjoy his success.

Am I being too cornball about a smallish software company cashing out? Perhaps. But for every story of lottery-like bonanzas in Silicon Valley there are ten stories about startups that gut it out for years and never make it. And then there’s one about one that does.